COMMENTARY: Sorting out the future of Connecticut Off-Track Betting

DAN NOWAK

Published 12:00 am, Monday, January 3, 2011

I recently had a one-on-one interview with Brooks Pierce, president of Sportech's Racing Division and Chief Business Development Officer, who was touring the New London off-track betting outlet. On Oct. 5, the New York-based Scientific Games Corporation announced it closed on the sale of its racing division, which includes Connecticut Off-Track Betting, to Sportech Plc, an online sports wagering site based in Liverpool, England. Pierce laid out future plans for Connecticut OTB, including a $1 million investment for expansion and improvement of existing facilities, increasing the Connecticut OTB workforce and the feasibility of an online horse-racing betting site. Scientific Games had operated Connecticut OTB since 1993 when it purchased the OTB system from the state.

Q: What is the difference between the Connecticut OTB system operated by Sportech now and the OTB system that was operated by Scientific Games.?

Brooks Pierce: While Connecticut OTB was a smaller aspect of Scientific Games' overall business structure, it is a major aspect of the racing division now operated by Sportech. It is much more important for Sportech to see Connecticut OTB thrive and survive. It (racing division) was a business that was for sale for almost three years and Scientific Games was not prepared to invest in the business. We have instituted a new business model that is definitely positive where we are adding new OTB systems to existing sports bars. We are bringing horse racing to a new clientele, in a familiar sports atmosphere where it is a natural thing. A sports bar patron watches a football or basketball game and is also exposed to horse racing. It increases traffic at the sports bar bringing in horse racing fans and there is a cross-over of patrons betting on horse racing. It really is a win-win situation because it increases revenue for the state and the town that hosts the OTB branch and it also adds jobs.

Q: In October when Sportech took over the OTB system you mentioned upgrades and improvements would be researched and ongoing. What upgrades and improvements are planned for 2011?

Pierce: We're contributing close to $1 million in upgrading existing facilities and adding new facilities throughout the state. On the audio and visual side we are adding 100s of flat screen TVs to improve viewing. Our upgrades and improvements include new furniture, new bathrooms and carpeting.

Q: Are any new facilities being planned for 2011?

Pierce: By law we are allowed up to 18 (OTB) facilities and we will be opening our 15th facility in a sportsbar in Willimantic (January). Our goal is to ultimately reach 18 facilities but it will take time. But it requires town approval and that can take time.

We have some sites in mind but we're not a liberty to discuss them at this time. Towns have to understand that when we come into a community it means upgrading the facility (sportsbar) we will go into, jobs will be added and we pay taxes in those towns.

Q: What is the update on the plans for Sports Haven? The goal is to downsize the building and move to a smaller facility within New Haven. How close is that to being a reality?

Pierce: We're sitting on nine acres of land in a good location on the waterfront. Sports Haven is much larger than what we need, we don't need 55,000 square feet of space. But we really don't want to lose the location. We would like to sell the site to the right developer who would include us in their plans for a smaller facility right where we are now at the existing site. I can't discuss the specifics, but we are in negotiations with people interested in the property who would include us in their plans.

Q: Some OTB customers have asked me since Sportech's main operation includes online betting, are there any plans to pursue and develop an online horse racing betting site based in New Haven, especially since online horse racing betting is legal and accepted by the United States government?

Pierce: We prefer not to discuss an online presence at this time. But Sportech is in a jurisdiction in the UK (United Kingdom) where it's (online sports betting and horse race betting) legal. Online betting is a big part of Sportech's business. But right now our only focus is to operate Connecticut OTB and provide the technology necessary for off-track betting in places like New Jersey and even the Netherlands. As far as internet wagering goes, from Sportech's business perspective, online horse wagering. with the proper regulatory approval, is part of our strategy. As far as Connecticut is concerned, there would first need to be a discussion with the proper regulatory officials and there is no immediate plan to pursue that now. Would we ever plan to talk to them? We would discuss it at some point. But with a new governor coming into office, now isn't the right time.

Q: The economy has hit people and businesses hard in recent years. How would you access the 2010 attendance and handle (money waged) for Connecticut OTB?

Pierce: We are not immune to the economic trends. Our business has declined although some existing facilities like Norwalk (OTB) are doing well. Some of the decline is offset by going into the new facilities. If we open all 18 (OTB) facilities we are allowed to open it helps make our core business as productive as it can be. New facilities help to mitigate the losses at existing facilities. There has never been a more competitive time for the gaming dollar and with the malaise of the economy it's a difficult situation.

Q: Because of your trip to New London, is that an indication you are trying to improve your OTB presence in that area of the state?

Pierce: The New London site recently opened and it's a great market for us. I just wanted to get a sense of how the facility was doing, introduce myself to the folks there.

Q: How would you compare Connecticut OTB to the other OTB systems around the country?

Pierce: We've steadily grown the business since we took over. We see Connecticut as a great market even with our handle down slightly (down 5.6 percent through November compared to Jan.-Nov. in 2009). We are encouraged by our new business model. We invested $75 million in securing the racing division from Scientific Games and Connecticut OTB is a big part of that business.

Q: Do you plan on expanding the Connecticut OTB workforce at all? Will more jobs be available at OTB sites in Connecticut?

Pierce: As we make improvements and get to 18 facilities, we will add new jobs. Our headquarters is located across the street from Sports Haven (Maritime Building) and we'll be moving existing employees into those offices and we'll also fill some positions at various levels. In this economy adding jobs of any kind is significant and we'll do it.

Q: What is Connecticut OTB's outlook for the future?

Pierce: We hope the economy improves and we're investing in the future. We want to be prepared for that by upgrading our facilities. We will do what we can to increase the handle in Connecticut. We want to be a big part of Connecticut's future. We'll be aggressive in growing our customer base as best as possible with aggressive marketing and advertising.